Tax paid erroneously and filed for refund under Section 11B.

PJ/CASE LAW/2016-17/3171

Case:-M/s MAGNUM CLOTHING PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, CHENNAI

Citation:-2016-TIOL-345-CESTAT-MAD

Issue:-Tax paid erroneously and filed for refund under Section 11B.

Brief Facts:-The simple case of the appellant is that it had not availed exemption granted by Notification No.18/2009-ST, dated 07.07.2009 due to its ignorance. It paid service tax in respect of services availed from the commission agents engaged abroad for marketing its readymade garments. When appellant came to know that service tax was not payable, they filed the refund of the taxes erroneously paid under Section 11B of the Central Excise Act, 1944. Revenue claimed on the other hand that when the appellant did not follow the route of the notification, its claim is barred by law.

Appellant contention:-The basic principle of taxation is that taxes are not exported but goods are exported. If the taxes involved in export of goods due to reverse charge mechanism are not refunded that shall form part of the cost of the exported goods, which is not desired by law makers. Therefore, appellant's claim of erroneous payment of tax made and it is an exporter, needs to be considered under section 11B of the Central Excise Act, 1944 since provision of Central Excise law are adopted by section 83 of the Finance Act, 1944 to give full effect and play to the scheme of taxation under Finance Act, 1994. Learned appellate authority should have examined the claim on the basis of pleading and law relating to refund under Section 11B of the Central Excise Act, 1944. That not being done, the matter needs re-examination in the light of that provision of law.

Respondent contention:-Learned departmental representative, at this stage, brings out that Hon'ble High Court of Allahabad as held in the case of Addi Industries Ltd. Vs Commissioner of Customs & Central Excise reported in 2014 (36) S.T.R. 27 (All.) = 2014-TIOL-530-HC-ALL-ST that when the notification does not allow the benefit thereof to a claimant, no refund is permissible. It may be stated that the facts of that case was that the claim related to the period prior to the issue of the notification. But, in the present case, the exports have occurred in three spells. The first period was from 22.06.2009 to 27.03.2010, which is the date of notification no.18/2009. A small part of the period falls during the period when no notification was issued. The second spell of the export covered the period Apr. 10 to Sept.'11 and third spell was Oct.'10 to Mar.'11. The present claim of the appellant goes to the root of section 11B which deserves consideration. Reasoning stated in this order as above is fortified from the principle laid down in para 9 of the judgment of the Hon'ble High Court of Allahabad. Hon'ble High Court noticed in that case that the taxable services being related to the export for the period Apr,'08 to Jun.'09, appellant was even not entitled to get the refund thereof under Section 11B. No doubt, once the period of claim relates to post notification period, appellant deserves consideration.

Reasoning of judgment:-The matter is remanded to the Adjudicating authority to Re examine the entire case in the light of the ratio laid down by Hon'ble High Court of Allahabad in the aforesaid judgment and the pleadings of appellant that its claim was not time barred, for which, it is entitled to refund under Section 11B of the Central Excise Act, 1944 and pass appropriate order.

Decision:-Case remanded.

Comment:-The gist of the case is that learned authority while passing order should have equal regard to Doctrine of Unjust Enrichment and afford reasonable opportunity of hearing to the appellant. In the instant case, both the principles were ignored and decision was passed without considering the case laws as well as other submissions given by the appellant. Thus, the case is remanded to adjudicating authority with a direction to consider these principles and pass order accordingly.

Prepared By:-Alakh Bhandari

Comments

PJ/CASE LAW/2016-17/3171

Post a Comment

Query